Is auto insurance mandatory?

Auto insurance simply refers to an insurance policy for all motor vehicles on the road so as to simply provide financial protection against comprehensive coverage, medical payments, personal injury protection, collision coverage and underinsured or uninsured motorist coverage.

The best thing with auto insurance is that it ensures that any person who is driving is expected to take fiscal responsibility for damages that occur in case you are responsible for a road accident. Auto insurance will be very helpful in a scenario where someone has been hit by an underinsured or uninsured driver.

Additionally, auto insurance policy by American insurance firms is really affordable. Nevertheless, you must maintain a decent score and a good driving record in order to acquire these lower rates.

Mandatory auto insurance

Now that we now understand what auto insurance really is, the next question we should look at is, ‘Is car insurance mandatory in the United States?’ Well, most people simply assume that it is a constitutional mandate that all drivers must acquire care insurance. However, you should keep in mind that the various laws governing the car insurance are developed and set only at the state level. It is also worth noting that various states tend to have very different laws.

Some people even consider this compulsory auto insurance policy to be unconstitutional by claiming they are being forced to buy a product by the government. They also feel that it enhances discrimination as the poorer people cannot afford it. They also feel that this insurance policy enables the American insurance companies to have control over the drivers. Failure to buy the auto insurance policy, certainly tend to have some limitations to the drivers. These limitations may include: suspension of the driver’s license, fines, arrest and their vehicles are not registered.

Most states in the US have already set laws that promote this mandatory car insurance. This is a policy that started many years ago since the arrival of the very first motor vehicle. It was obvious that early on that these automobiles would eventually crash and lead to damages that the responsible person would be unable to compensate. The states of Connecticut and Massachusetts were the first state to set laws of compulsory car insurance at around 1925. Other states then followed in enacting and mandating these auto insurance liability laws.

However, there is currently one state, with its ‘live free or die’ attitude, that feels it doesn’t need this mandatory auto insurance for all drivers- the New Hampshire state. In this state, the only thing that driver are required to do is to justify that they have the ability to compensate for any damages that occur from an accident and they are found responsible. The drivers who decide not to purchase car insurance policy in this state must pay cash or post a bond that is equivalent to the cost of damage caused during the accident. Drivers responsible of an accident in this state pay for the damages of up to $25k for property damage and $50K for liability. In case the driver is unable to compensate or pay for these damages, their registrations and driver’s licenses may be suspended.

(Article Continues Below Advertisement)

Another state that is also worth considering is the state of Virginia. In this state, the residents can opt not to pay their car’s insurance. In doing so, they are obligated to pay $500 to the state annually.

Advantages of mandatory auto insurance

The main advantage of this mandatory insurance is that it will ensure that you are always on the right side of the law while on the road. It will protect you from license suspension, vehicle impoundment, jail and fines, all which may arise due to driving uninsured vehicle in almost all the states in the US soil.

Additionally, this insurance will help you save some money in case your car is involved in an accident. This is due to the fact that the damages caused will be covered for by the American insurance firm that you have purchased an insurance policy from.

Conclusion

Though mandatory car insurance may seem like burden imposed to the citizens, it is really helpful especially when the car is involved in an accident or when pulled over and the driver is asked to proof the insurance of the car. As we have already seen, lack of the car insurance will certainly lead to suspension of registration or license. In case one of this is suspended, insurance is needed so that one can get reinstated. This insurance coverage is for a certain length of time, usually three years.

It is therefore very important that all drivers comply with the auto insurance so as to avoid getting into trouble with their respective states. This insurance also proofs to have some financial benefits in case of an accident.

About Thomas Anderson

One comment

Pretty good article. What is not mentioned is that many insurance companies oppose mandatory auto insurance laws (don’t want to insure bad drivers, would rather you buy insurance to cover any damages). Also not mentioned are the studies in which poor people say they need food stamps or cannot pay their rent because of the high cost of mandatory auto insurance. Also, mandatory auto insurance does not cover everything in a bad accident.